Such is the scale of spending cuts implied in the Chancellor’s Autumn Statement that we are heading, according to the Institute for Fiscal Studies yesterday, towards “a fundamental re-imagining of the role of the state”.
In the words of IFS director Paul Johnson: “If we move in anything like this direction, whilst continuing to protect health and pensions, the role and shape of the state will have changed beyond recognition.”
But which government has the will, still more the mandate, to do this? This week we have heard, through selected official leaks ahead of the Autumn Statement, much detail of “new” spending plans, ranging across more money for the NHS, billions more on road maintenance and improvement, substantial money for flood defences and plans for building a new “garden city” in England.
But on public expenditure reduction, Chancellor George Osborne has been far less candid. So far, public spending cuts by Whitehall departments have totalled £35 billion. But the IFS calculates that reductions of £55bn are still to come. The precise nature of planned cuts to services such as local government, defence and transport have not yet been spelled out. But to achieve the Office for Budget Responsibility’s forecast of a budget surplus of £23bn by 2019-20 would require cuts on a colossal scale. They would take, says the IFS, “total government spending to its lowest level as a proportion of national income since before the last war”.
It is hard to imagine, even without the prospect of a gridlocked Westminster after the May election, that the public would tolerate a programme of cuts on this scale. The cuts would be particularly severe in non-protected areas such as local government.
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If David Cameron and George Osborne want to change the nature of the society we live in by altering the nature of the state, they should be honest about their intentions, and seek a specific mandate to do so. Harsh though this moment of truth now looks, it is not beyond solution. There is still waste in public spending, from fruitless billions on faulty computer systems to the multiplication of government agencies and accompanying bureaucracy.
Fixing the existing system to bear down on waste would go a long way to avoiding the creation of a new and altogether more austere one.
Even with this, however, it has been all too readily assumed that the relentless increase in the NHS could be met without significant implications for public services elsewhere. And while many would advocate tax rises to fill the gap, the hikes required would risk slower growth – and lower tax revenues.
The inescapable truth is that the “victor” next May will need to drive a sustained savings and efficiency programme if the rise in government debt is to be halted. For politics of whatever colour, kicking the can down the road is no longer an option.
From Harthill with love
Plans are advanced for another James Bond movie, with Daniel Craig in the 007 role for the fourth time.
Here’s a sneak preview of the script.
M: So, Mr Bond, we’ve been expecting you at HQ. It’s been a while since we tried to wring a few million more from this tired movie franchise.
BOND: There’s life in 007 yet. If I can get my Zimmer frame through the door.
M: Ski-ing accident?
BOND: I fell off a number 23 bus. Expenses aren’t what they were.
M: I’m glad you’ve realised that, Bond. We’ve been hit hard here at HQ with the spending cuts.
BOND: I need a drink.
M: There’s Cremola Foam, just how you like it. Shaken, not stirred.
BOND: What about a new car?
M: There’s a new model just in, Bond. You’ll love it. It’s the Osborne Two-Oh-One-Five. [Whisks off dust cover to reveal rusting Reliant Robin.]
Goes from nought to 35 in about 20 minutes, there’s a Tesco petrol voucher in the glove compartment. And a hole in the floor so you can pedal faster.
BOND: No gizmos?
M: There’s a rear-end mounted water pistol.
BOND: Is it submersible?
M: We’re all under water now, Bond. Your mission is to destroy the evil Spectre empire.
BOND: Where’s their base? Bermuda? Honolulu?
BOND: Clever. No-one would ever think of looking there.
BOND: And the girl?
M: You’ll find her serving at the motorway services. Your codeword is: “Double chips, hen.” She will reply: “Chips is aff.”
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